Experts expect Asian Paints Ltd on Jan. 20 to report strong double-digit year-over-year volume growth for the December quarter, which, combined with price hikes during the period, could lead to a revenue increase of about 25%, it said.

They also expect revenue for India’s largest decorative paint maker to rise 20% from the previous quarter.

However, rising input costs could impact margins and cause EBITDA (earnings before interest, tax, depreciation and amortization) margins to decline year-over-year. On a sequential basis, margins are expected to improve.

The brokerage expects the Mumbai-based company to report consolidated profit after tax (PAT) of Rs 1,000-1,215 crore, up 70-100% quarter-on-quarter. Each year, PAT is expected to drop by 2-20%.

The company reported a consolidated profit of Rs 1,238 crore compared to consolidated revenue of Rs 6,788 crore a year earlier. Profit in the previous quarter was Rs 596 crore against consolidated revenue of Rs 709.6 crore.

street view

Discretionary product companies such as Asian Paints are expected to see a strong rebound in overall results as a lot of pent-up demand is unleashed this quarter.

In addition, a strong festive period and a busy wedding season are expected to help the company perform well in the quarter.

Brokerage firm Phillip Capital’s survey of dealers across India states that “the company will report strong volume growth of 25 percnet+ in 3QFY22, driven by four factors: (1) market share gain, (2) The premiumization trend remained unchanged, (3) dealers increased inventories due to sharp price increases in the middle of the quarter, and (4) ancillary areas such as putty and waterproofing showed strong traction.”

The brokerage expects revenue to rise about 35% year-on-year to Rs 9,334 crore on the back of strong volume growth and price hikes.

Rising crude oil prices and higher but stable titanium dioxide prices will continue to impact input costs, which brokerage Phillip Capital expects to rise 45% year-on-year.

This will result in a 443 basis points (bps) year-on-year decline in EBITDA margin for the quarter to 21.9%, with EBITDA of around Rs 2,045 crore compared to Rs 1,788 crore in the same period last year.

Phillip Capital expects net profit to rise 18% year-on-year to Rs 1,459 crore.

Other brokerages, however, are more conservative in their forecasts. JM Financial expects volume growth of 12%, with an average realized increase of 15%.

Complete News Source : moneycontrol